Dumped milk no joke for Georgia dairies

Jennifer Whittaker, Georgia Farm Bureau

The Johnson Family wasn’t playing an April Fool’s joke when they posted a video on their Providence Dairy Facebook page showing about 5,400 gallons of milk gushing from their milk tank down the drain. The April 1 post was a jarring image of how COVID-19 is impacting Georgia farmers.

For a number of years, the Johnsons have used social media to give consumers a glimpse of daily life on a family dairy farm. Matt and Laura Johnson farm in partnership with his dad, Paul Johnson, milking about 1,200 cows three times a day on their Decatur County farm.

 

 





 

 

The Johnsons are among about 50 dairy farms across Georgia from LaGrange on the Alabama line over to Augusta and down to the Florida line that belong to the farmer-owned Dairy Farmers of America Co-op (DFA) according to DFA Southeast Area Chief operating officer Jon Bebermeyer. Nationwide, about 13,000 family farms belong to the co-op that markets about 30% of all milk produced in the U.S.

For DFA’s milk week of March 28-April 3Bebermeyer estimates DFA had to dump about 10% of all milk produced in the co-op’s Southeast area, which runs from east Texas through the lower part of Missouri over to Virginia down to the Gulf Coast encompassing all or part of 15 states. Milk dumped in Georgia for that period was less than 10%, Bebermeyer estimates.

“That ten percent dumped in our Southeast area is about the same as was dumped nationwide as a whole based on the numbers I’ve been hearing,” Bebermeyer said.

The largest segment of Georgia’s 130 dairy producers belong to DFA, with about 65% of the milk produced in GA going to DFA plants, said  Farrah Newberrry,  executive director of the Georgia Milk Producers (GMP), which promotes Georgia dairy farmers to consumers with programs such as the Mobile Dairy Classroom.

Johnson, who serves as a council member for the DFA Southeast Area, wasn’t alone in being asked to dump his milk.

“I know of at least five other DFA farmers who are also having to dump milk, but there are others. These are just the five that I talk to,” Johnson said on April 2. “ I know they’re dumping milk in Florida. It’s happening all over the country right now. I understand it’s a business decision that unfortunately has to be made. At end of day I trust the people marketing my milk are making the best decisions they can.”

Knowing it’s what’s best for business didn’t make dumping his milk easier. As of April 3, the Johnson Family had dumped four tanks of milk.

“It’s hard to watch. You work so hard 24 hours a day, seven days a week, 365 days a year to produce something that’s healthy. Then, at the end of the day you have to watch it go down the drain,” Johnson said. “I haven’t had to watch it go down the drain one time but four times this week. I’ve had to explain to my employees that they’ve done nothing wrong. We’re doing it because there’s no market for this milk.”

As of April 6, both the GMP and The Dairy Alliance, another farmer-funded organization that promotes dairy products to consumers across the Southeast region, said only South Georgia producers had been asked to dump milk.

“We didn’t start seeing requests for Georgia farmers to start disposing of milk until the week of March 28-April 3. It’s my understanding that farms in the Midwest were asked to earlier,” said

Rebecca Egsieker, The Dairy Alliance director of communications & farmer relations. “So far in Georgia, it really has been concentrated in South Georgia and among DFA producers. I don’t know of any producers in North Georgia or East Georgia who have been asked to.”

As of April 7, Georgia dairy farmers producing for the Maryland & Virginia Milk Producers Cooperative (MVA) had not been asked to dump milk, MVA Member Services Manager Jim Howie said, but he couldn’t promise they wouldn’t have to at some point.

“As of right now, we have not had to dump any milk, but I can’t say for certain that we won’t have to dump milk at some time,” Howie said. “This market always changes very rapidly and now it seems to be changing at a lightning pace.”

About 25 Georgia dairies located in the Eatonton/Greensboro area and near Millen produce for MVA, Howie said.

A source with knowledge of Georgia’s dairy industry, who asked to remain anonymous, said the 15 to 20 Georgia dairy farmers producing for Southeast Milk Inc., have been asked to cut their milk production and are only being paid for 82% of a dairy’s produced milk. The estimated 10 Georgia farms selling to Borden’s have been notified they may be asked to dump their milk.

 

 





 

 

Why is milk being dumped?

Johnson explained that before COVID-19 knocked the U.S. dairy supply chain out of balance, Southeast dairies were entering the time of year when cows naturally produce more milk due to favorable spring weather.

“The first of March to mid-May is a period of time for Southeast dairies called ‘Spring Flush.’ During this time, dairy cows naturally produce more milk. The weather is good. Grass is growing fast,” Johnson said. “Moderate weather conditions make the cows more comfortable. The sun is shining. Cows are producing more milk across the entire Southeast region.”

During the Spring Flush period, excess milk from Georgia goes to ‘balancing’ plants that only operate seasonally three to four months a year, Johnson said. These plants soak up the extra milk produced in the spring.

Bebermeyer said DFA usually relies on two balancing plants to absorb Georgia’s Spring Flush milk. A plant in Union Town, Alabama, makes cheese for processed cheese products. A plant in Baconton, Ga., uses a reverse osmosis process to take water out of milk to make condensed products used by restaurants and other food service customers, which have seen a decline in business due to the COVID-19 response.

As of April 7, both the Alabama and Georgia balancing plants were completely idle, Bebermeyer said, however, balancing plants in Kentucky and Texas that DFA sends excess milk to are running at full capacity.

“Our balancing operations have been severely limited,” Bebermeyer said. “Their customers have called them and said, ‘Don’t ship [products].’ So, we can’t send excess milk to them. Because of COVID-19 shutting down restaurants, the demand for cheese has fallen way off. Plants don’t have anywhere to ship their dairy products to, so demand [for milk] has fallen way off and this has milk going on the ground.”

COVID-19 has also impacted how consumers shopped.

“When COVID awareness ramped up the week of March 7, households that might buy one gallon of milk a month bought three to five gallons to stock up initially, but their drinking habits haven’t changed a lot,” Johnson said.  “People overpurchased.”

For the next two weeks in March, Southeast milk plants processed more milk than usual as grocery stores scrambled to refill shelves, Johnson said. Expectations were that milk orders would be back-to-normal the week of March 28-April 3. Instead, milk processors reduced their order for fluid milk as restaurants had fewer customers and demand for milk products decreased due to shelter-in-place orders.

“At the beginning of COVID-19 awareness in early March, we had a huge surge in demand in retail stores with everybody going out to buy all they could. Then, on the heels of that, we had this huge contraction,” Bebermeyer said. “We’re hoping we find some level of normalcy but it seems like every day the market is changing as Covid-19 unfolds.”

One-third of the milk produced in the U.S. goes into the food service sector, such as restaurants and schools, while the other two-thirds of the U.S. milk supply goes into retail for a variety of dairy products including milk, cheese, ice cream, butter, Egsieker said. Restaurant business has been cut by 60% during COVID response she added.

Bebermeyer thinks the milk supply has a chance to level out faster in the Southeast because most of the milk produced in the region is sold as fluid milk.

“Other [dairy market] regions around the country rely on cheese sales. They’ll need more recovery in the food service sector. They’ll need to see restaurants come back,” Bebermeyer said. “I’m hopeful that traffic through the retail stores rebounds quickly.”

Bebermeyer encourages consumers to help dairy farmers out by eating more cheese.

“If you can put a little more cheese on your pizza or on your taco, please do,” Bebermeyer said. “It may not sound like much, but it moves a lot of milk off the market.”

As of April 6, the Kroger and Publix fluid milk processing plants in the Atlanta area and the Ingles fluid plant near Ashville, N.C., were running at full capacity, Egsieker said.

Cost of lost milk will be shared

The only consolation for dairy farmers being asked to dump their milk is that the financial loss will be pooled nationwide among all farmers and across individual co-ops.

“This is a problem affecting farmers across the country. The federal milk marketing order is allowing our financial loss to be pooled nationwide so the loss doesn’t fall on one farmer. This means at the end of the month when the federal order settles up how milk is paid, the cost of dumped milk will be shared by dairy producers nationwide regardless of the co-op a farmer ships to. Co-ops are also sharing the loss across their members,” Johnson explained.

How were farms selected to dump milk?

Bebermeyer said DFA asked its farmers to dump their milk based on economic and disposal factors. Farmers selected to dump their milk are located farther away from a processing plant and so have higher hauling costs.

Trucking milk off farms to be disposed of at a processing plant would have added extra expenses to dairy farmers already losing money. So, DFA also needed farms with the lagoon capacity to hold the milk. Lagoons are sealed ponds dairies use to hold manure diluted in water until it can be used as liquid fertilizer on crops. Dairy lagoons must meet state and federal environmental regulations.

“The co-op is trying to do this in a way that saves us the most money and is environmentally   responsible,” Johnson explained.

What’s being done to rebalance the supply chain?

Dairy co-ops and numerous organizations that represent dairy farmers including the National Milk Producers Federation, Georgia Milk Producers, The Dairy Alliance and Farm Bureau are working to help correct supply chain issues causing farmers to dump milk.

One of the things co-ops and dairy groups have been doing is trying to get stores to take down signs limiting the number of dairy products customers can buy.

The Dairy Alliance has spoken with corporate leaders representing the major grocery chains in Georgia including Kroger, Publix and Ingles about the operation of their milk processing plants and the fluid supply being sold in their stores, Egsieker said.

“Corporate leaders for Ingles, Kroger and Publix have told us they do not have a corporate policy limiting the number of gallons of milk customers can buy,” Egsieker said. “We’ve already heard from several retailers that we called on April 7 that they have removed the signs and many have received letters from headquarters to take down the signs.”

If customers see signs in their grocery stores limiting the amount of milk or dairy products they can buy, Egsieker suggests they politely ask the store manager why milk purchases are being limited when farmers are having to dispose of milk.

She said some stores, such as Target, do have a corporate policy to limit customer purchases of dairy products.

“I’ve been in direct conversations with leadership of major chains, independents and industry associations. We have their assurances that there are no company-wide policies limiting purchases,” Georgia Commissioner of Agriculture Gary Black said via email. “Some stores did experience initial shortages due to high demand.  Now that the surge has evened out, there is no shortage of milk but a temporary dislocation of supply. They are working on further alignment of supplies to meet the new supply dynamic.”

On April 3, American Farm Bureau President Zippy Duvall sent a letter to Secretary of Agriculture Sonny Perdue urging the USDA to consider multiple options to support U.S. dairy farms,which Georgia Farm Bureau supports. Action Farm Bureau asked Perdue to take includes making special direct payments to dairy farmers and activating a milk loss program similar to the 2019 Wildfires and Hurricanes Indemnity and Milk Loss (WHIP-ML) Program to indemnify eligible dairy operations for milk dumped or removed due to COVID-19 without compensation from the commercial milk market. Farm Bureau also requested USDA immediately buy dairy products to offset the decline in demand from the food service and school meal sectors and create a voucher program to distribute donated milk to food insecure citizens through retail stores since some food banks cannot distribute perishable products.

A perfect storm

“It’s a cliché to say this, but the dairy industry has been hit by the perfect storm,” Newberry said.

Before COVID-19 struck the U.S., the virus had caused U.S. dairy exports to other countries to slow down Newberry said. Then, COVID-19 slowed down the U.S. domestic dairy market.

Prices farmers were getting for their milk had also dropped significantly from January to early March, Putnam County dairy producer Tim Camp said.

“The price for Class Three milk (used for cheese) and Class Four milk (used to make powdered milk) has plummeted about 30%, and these two classes are used to determine the price of fluid milk, Class One,” Camp said.

The upheaval in the dairy market comes after a long spell of poor prices.

“We were gearing up for a really good year price wise before COVID hit, so some producers were milking more cows,” Newberry said. “After six years of low prices, I’m concerned about the emotional toll this is going to take on our dairy farmers. Not only are they worried about trying to keep their families and farm workers healthy, but now they’re also having to deal with low prices again.”

Johnson, who will have been dairy farming for 21 years in May, is holding onto the big picture.

“I don’t think we’ll lose the farm, but if we do, it won’t be the end of the world. As long as my family and my employees are healthy, we’ll be ok.”

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